Key facts
- Daikin's operating margin was 8.3% in FY2025, falling short of targets.
- The company's new "Fusion 30" plan aims for a 10% operating margin and 12% ROE by FY2028.
- Daikin's revenue reached ¥5.015 trillion in FY2025, a 6% year-on-year increase.
- Operating profit in FY2025 was a record ¥415 billion, up 3% year-on-year.
- The air-conditioning and refrigeration segment saw operating profit rise 7% to ¥377 billion.
- The chemicals segment's operating profit fell 28% due to weak semiconductor demand.
Daikin Industries is facing pressure from investors to improve its capital efficiency, as the Japanese air conditioner manufacturer's assets are increasing at a faster pace than its profit growth. This situation has prompted calls for the company to shed underperforming businesses.
In its FY2025 results, Daikin reported revenue surpassing ¥5 trillion for the first time, reaching ¥5.015 trillion, a 6% year-on-year increase. Operating profit also hit a record high of ¥415 billion, up 3% from the previous year. However, the operating margin remained at 8.3%, a figure management considers a serious concern and the top priority to improve.
To address these challenges, Daikin has formulated a new five-year strategic management plan, "Fusion 30," covering FY2026 through FY2030. This plan aims to "rebuild earning power" by focusing on high-profit domains and building a more resilient profit structure. Specific targets include achieving a 10% operating margin and a 12% return on equity (ROE) by FY2028. The company also aims for an ROE exceeding 15% by 2030.
Key initiatives under "Fusion 30" include expanding the solutions business, restructuring low-profitability operations, and a ¥350 billion tender offer for its own shares. The air-conditioning and refrigeration segment performed well, with operating profit rising 7% to ¥377 billion, driven by market share recovery in North America and sustained profitability in China. Conversely, the chemicals segment struggled, with operating profit falling 28% due to weak demand in the semiconductor sector.